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Abstract:

We examine the effect of a rise in foreign ownership on banks' interest revenues and profitability using panel data of banks worldwide. We determine the exact yearly foreign ownership for each bank and construct a continuous foreign ownership variable. Estimating with the system generalized methods of moments (GMM) technique we find that a rise in foreign ownership negatively affects bank performance, providing evidence for the home field advantage theory.

Affiliations:1:
Faculty of Economics, University of Groningen, Groningen AV, The Netherlands,External CREDIT Fellow, University of Nottingham, UK 2:
Faculty of Economics, University of Groningen, Groningen AV, The Netherlands